On November 16, 2016, in National Federation of Independent Business v. Perez, No. 5:16-cv-00066, a federal judge in Texas issued a permanent injunction  preventing the Department of Labor (the “DOL”) from enforcing its new interpretation of the Labor-Management Disclosure Act’s “Persuader Rule.”  The new DOL interpretation would have required far more expansive public disclosure by law firms and others regarding work they perform for employers in conjunction with certain labor relations activities, including union organizing and collective bargaining.

By granting summary judgment to the plaintiffs, which include ten states and various business groups challenging the new Rule, Judge Sam R. Cummings converted the nationwide preliminary injunction he granted in June into a permanent injunction. The preliminary injunction blocked the implementation of the new Rule, which was finalized by the DOL in March and scheduled to go into effect on July 1.

The DOL’s new Rule attempted to narrow the so-called “advice exemption” by changing the long-standing definitions of reportable “persuader activity” and non-reportable “advice.” The previous iteration of the Rule only required such reporting when an advisor made direct contact with an employer’s employees, regardless of the persuasive purpose of the advice.  Under the now permanently-enjoined rule, any legal or other advice that is designed to “indirectly persuade” employees regarding union organizing or their rights to engage in collective bargaining would have been publicly reportable by both employers and their legal advisors.  Moreover, in accordance with the DOL’s interpretation, many run-of-the-mill employment-related undertakings, like the modification of employee handbooks, under certain circumstances, could have been considered “persuader activity.”

Shortly after the new Rule’s publication, several states, associations, and other entities filed lawsuits against the DOL, seeking to enjoin the Rule on a variety of legal theories, particularly that the new Rule exceeds the scope of the DOL’s authority pursuant to the Labor-Management Disclosure Act and conflicts with existing state rules governing the professional conduct of lawyers. These lawsuits were filed in the District of Minnesota, the Eastern District of Arkansas, and the Northern District of Texas.

On June 27, 2016, in Texas, Judge Cummings issued a nationwide preliminary injunction, enjoining the implementation of the DOL’s new Rule days before it was scheduled to take effect. Judge Cummings explained that the Rule is defective to its core because it, among other things, eliminates the Labor-Management Disclosure Act’s advice exemption and, therefore, is arbitrary and capricious and constitutes an abuse of discretion.  Plaintiffs separately moved for summary judgment in August and September, seeking a nationwide permanent injunction.

In the latest ruling, Judge Cummings granted those summary judgment motions and converted the preliminary injunction preventing the implementation of the new Rule into a permanent injunction with nationwide effect, noting that the new Rule should be held unlawful and set aside. Earlier in the week, Judge Cummings issued a show cause order asking the parties for additional briefing over the issue of whether the government owes attorneys’ fees and costs.

The outgoing Obama administration DOL may appeal the ruling, like it also appealed the ruling issuing the nationwide preliminary injunction. However, the changing of presidential administrations in January makes it extremely unlikely that the new Persuader Rule will be implemented in its current form, regardless of any future steps in the litigation.

Photo of Michael Lebowich Michael Lebowich

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional…

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He also has significant experience in representation and unfair labor practice matters before the National Labor Relations Board.

His broad employment law experience includes handling of race, national origin, gender and other discrimination matters in state and federal court. A significant amount of his practice is devoted to counseling clients regarding the application and practical impact of the full range of employment laws that affect our clients, including all local, state and federal employment discrimination statutes, the Fair Labor Standards Act, the Family and Medical Leave Act, and state labor laws.

Michael has substantial experience in a wide variety of industries, including entertainment, broadcasting, newspaper publishing and delivery, utilities and lodging. He represents such clients as The New York Times, BuzzFeed, ABC, the New York City Ballet, PPL, Pacific Gas & Electric, Host Hotels and Resorts, and The Broadway League (and many of its theater owner and producing members).  Michael also has significant public sector experience representing, among others, the City of New York and the Metropolitan Transportation Authority.

Michael is a frequent guest lecturer at Columbia Business School, the Cornell School of Hotel Administration, the New York University Tisch School for Hospitality, Tourism and Sports Management, and is an advisory board member of the Cornell Institute for Hospitality Labor and Employment Relations.